MANILA -- Philippine monetary officials on Thursday reported that business sentiment in the country remains "broadly steady" even with the slight decline of the confidence index in the first quarter of 2017 to 39.4 percent from the previous quarter's 39.8 percent.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo, in a briefing, said the change in the index "is not significantly different" since perception of the respondents for the next quarter was higher.
Results of the Business Expectation Survey (BES) for the first quarter of 2017 showed that while the current quarter's confidence index went down, the index for the next quarter rose to 47.2 from the 34.5 in the survey in the last quarter of 2016.
"So we could expect that the economic activity, on the basis of the business expectation survey, will continue to be upbeat," he said but stressed that in terms of specific number "that is very difficult to pin down."
BSP Monetary Policy Sub-Sector Managing Director Francisco G. Dakila, during the same briefing, said the change in current quarter index of the BES should only be considered broadly unchanged because the "question is whether the change is significant enough or statistically significant."
"Going by the seasonality, we can take it also as something positive. Normally first quarter results are lower than fourth quarter results," he said.
BES index in the first quarter of 2016 stood at 41.9, lower than the previous quarter's 51.3.
It was also the same in 2015 when the first quarter figure went down to 45.2 from 48.3 in the last quarter of 2014.
The only exemption was the first quarter index in 2012 with the figure rising to 40.5 from the previous quarter's 38.7.
"Because all the survey results are subject to some human uncertainty you really can't say that it shows a downward revision in the overall confidence index," he said.
The latest BES survey showed that more respondents remain positive on their businesses even with the usual slowdown in business activity after the holiday and harvest seasons, the start of the implementation of new business strategies, the rising oil prices, which could impact the prices of raw materials; and the impact of policies of the Trump administration.
Respondents' expected domestic inflation to increase but to stay within the government's two to four percent target.
Outlook on the peso is for continued deprecation and for interest rates to increase due to the impact of the hike in the Federal Reserve rates in December 2016 and expected hikes this year and the impact of protectionist policies of the current US administration.
Based on the BES results in the last quarter of 2016, respondents' average peso-dollar level is 48. In the survey for the first quarter this year, it is seen to average at 49.5 while the level for next quarter is 49.70.
Guinigundo said these outlooks "can also drive the exchange rate dynamics to that level."
"Foreign exchange continues to be driven by sentiment even as market fundamentals continue to be resilient. These (market fundamentals) are stories that cannot drive the dynamics of the exchange rate," he added. (PNA)
Source: Philippines News Agency